Driving a seamless ecommerce expansion

As countries locked down and retailers temporarily closed their doors, ecommerce sales rose dramatically. To meet this heightened demand for online shopping, treasury departments have been hard at work to ensure their operations can cope.

Of course, as consumer demand for buying online has increased, companies have had to create or expand their ecommerce platforms to ensure they are able to sell directly to their customers. The sharp increase in the volumes of online and cross-border transactions, as well as the need to pivot business models, has created various challenges and opportunities for the corporate treasury function. Many of the resulting changes are here to stay.  

The impact on treasury 

Long after the pandemic is over, consumers are expected to maintain some of their new online shopping behaviours.  Given that this is a long-term shift, and not a temporary trend, continued investment in technology will be increasingly important to ensure business continuity – be it platforms connected via application programming interfaces (APIs), cloud technology for real-time access to data, or artificial intelligence (AI) for predictive analytics. In a recent survey of corporate treasurers conducted by The Economist Intelligence Unit (EIU) and supported by Deutsche Bank, 31% of respondents cited “accelerated adoption of technologies” as the trend that will most impact the treasury function.   

Disruptions to trade in raw materials and finished goods, as well as the temporary shutdown of retail stores, has also led many treasurers to rethink their supply-chain strategies and optimise their treasury structures. Actions include adapting new cash-management strategies, such as financing the shift in the distribution model from retail stores to flexible warehousing, managing a higher frequency of returns and refunds and setting up automated payments for scheduled product replenishment. The result has been a more strategic relationship between treasury and the supply-chain function, a positive trend that enables treasurers to build a more accurate picture of the supply chain, which can be leveraged to find its strengths and weaknesses. 

From cash to digital payments

For companies that were not already selling directly to customers, the move into ecommerce represents a significant shift in culture that has led to a significant expansion of digital payment infrastructures. The move has, however, not come without its stumbling blocks. The top challenge cited by respondents to the EIU’s global survey was “systems integration” for a seamless omnichannel shopping experience, which, if done poorly, can result in delays in processing payments and lead to higher fees and lost transactions. It was closely followed by the challenge of “managing FX risk” through the new lens of high-volume, cross-border online sales, which can make it difficult to correctly price in local currencies or manage FX fluctuations in the event of a delay at checkout. Among the other big challenges for treasurers cited were ensuring data security, dealing with a range of local versus global payment methods and the cost of different payment methods (see Figure 1). 

Figure 1: Top challenges facing treasurers as they expand their digital payments infrastructure

This move from physical cash to digital payments has presented big opportunities for banks, as even traditionally conservative markets such as Germany experienced a major payments transition. Against this backdrop, Deutsche Bank has worked hard to ensure it can meet the changing business models of its clients and is working to support the digital transformation of treasury across the board. As a payment service provider (PSP), the Bank is also ensuring that it can offer clients a broad mix of payment methods, to bring greater convenience and efficiencies to both consumer and treasurer. 

Getting it right 

Despite the rapid transformation of business models and team structures, more than half the treasurers (52%) responding to the EIU’s recent survey remain focused on financial risk management. This is, after all, one of the treasury’s core functions – and one that shows little sign of abating, with FX risk and safeguarding consumer data still a key concern. Yet, with the shift to ecommerce showing no sign of slowing either, treasury departments are beginning to better understand the role they must play. 

Going forward, treasurers should continue to establish best practice for the smooth deployment of payment systems across geographies, and keep up their demand for greater standardisation of PSPs in order to achieve better systems integration – all while ensuring that the needs of customers are kept front and centre. 

About  Kilian Thalhammer

Over 15 years in payment/ fintech/ ecommerce and loyalty make Kilian an expert when it comes to serious product, strategy and business development issues. After being Director Solutions for the Swiss Post he joined RatePay (Otto Group) as CPO and was global CPO of PAYMILL (Rocket Internet) until 2014. After being Global EVP Productmanagement at Wirecard, Kilian is now responsible for the business unit merchant solutions at Deutsche Bank.

About Deutsche Bank

Deutsche Bank provides retail and private banking, corporate and transaction banking, lending, asset and wealth management products and services as well as focused investment banking to private individuals, small and medium-sized companies, corporations, governments and institutional investors. Deutsche Bank is a leading bank in Germany with strong European roots and a global network.